George Shultz: The Case for Nuclear Zero January 4, 2013

George Shultz served in four Administrations, serving as an economic advisor to three Presidents before

turning his efforts to international relations as Secretary of State for Ronald Reagan at the height of the Cold

War. Still actively analyzing policy at the age of 90, he has focused much of his recent efforts on reducing

the spread of nuclear weapons. Jim talks with him about his support for eliminating nuclear weapons, and

the current state of American politics.

Transcript

JIM GLASSMAN:

Welcome to Ideas and Action, a television series about ideas and their consequences. I'm Jim Glassman. This week, we're at the Hoover Institution on the campus of Stanford University, for a special conversation with former Secretary of State George Shultz. He's been eyewitness to some of the most important events of the 20th century. His most recent pursuit: ridding the world of nuclear weapons.

GEORGE SHULTZ:

The nuclear weapon is the first thing that's really come along, on a ballistic missile, since the British burned the White House in 1814, that can really do us immense damage. It's very much in our interest to get rid of these weapons.

JIM GLASSMAN:

This week, a conversation with former Secretary of State, George Shultz. This is Ideas in Action.

(MUSICAL INTERLUDE)

ANNOUNCER:

Funding for Ideas in Action is provided by Investor's Business Daily. Every stock market cycle is led by America's never-ending stream of innovative, new companies and inventions. Investor's Business Daily helps investors find these new leaders as they emerge. More information is available at Investors.com.

JIM GLASSMAN:

Welcome to Ideas in Action, George Shultz. You wrote-- in 2007 in-- that America will soon enter a nuclear age, and I'm gonna quote, "more precarious, psychologically disorienting, and economically even more costly than was Cold War deterrence," end quote. Now-- is the future really gonna be more dangerous than the Cold War when we were worrying every second that the Russians would bomb us and that we-- or we would mistakenly bomb them?

GEORGE SHULTZ:

Well, we were worried then and we should be worried now. In those days, we basically had two contending powers, each armed with nuclear weapons. We each knew that a nuclear exchange would wipe us both out. Wouldn't be anything left. So, that meant a certain restraint was imposed. That was what deterrence was thought about.

JIM GLASSMAN:

So, today--

GEORGE SHULTZ:

Now--

JIM GLASSMAN:

--Yeah?

GEORGE SHULTZ:

--you have a different situation. More countries have nuclear weapons. What that means is that more fissile material is laying around. So, the more of it there is lying around, the more possible for-- it is for some rogue state or group like al-Qaeda, who keeps saying they wanna get a nuclear weapon, to get their hands on one. And those groups are suicidal in their orientation. They are almost, by definition, not deterrable. So, if they get a bomb, they get one to use it. And I think that's one of the reasons why I think the situation now is especially dangerous.

JIM GLASSMAN:

As well as the fact that there's no-- there might be a situation where there's no return address on the nuclear weapon?

GEORGE SHULTZ:

Well, if one of these organizations gets one, then-- you don't know what-- who-- who you're gonna retaliate against. They do all kinds of things even in a normal battlefield. They emplace their weaponry in civilian installations like hospitals or schools. Then they fire at you from there. When you fire back, you cause collateral damage, civilian casualties, which you don't want. I'm sure that a nuclear weapon probably would not be delivered by a ballistic missile. Probably it would be delivered in some other form. But at any rate, the consequences would be catastrophic.

JIM GLASSMAN:

So, in the past, we've relied on deterrents or mutually assured destruction-- as it was called. Now, you believe the answer is abolition of nuclear weapons. Is that correct?

GEORGE SHULTZ:

The nuclear weapon from the-- standpoint of the United States, the nuclear weapon is the first thing that's really come along, on a ballistic missile, since the British burned the White House in 1814, that can really do us immense damage. It's very much in our interest to get rid of these weapons.

And I think the same can be said for other countries. A nuclear explosion is-- has devastating consequences anywhere. So, we're better off to try to get rid of them. And I'm working with a group of people, some here at Hoover in Stanford, and some around the country, particularly Henry Kissinger, Bill Perry here at Stanford, Sam Nunn at the Nuclear Threat Initiative. Two of us are Democrats, two of us are Republicans. But we don't even talk about partisanship. We just talk about the problem and what to do about it.

JIM GLASSMAN:

And to do-- what to do about it is-- is treaties that would-- where countries agree to lower their stockpiles of nuclear weapons?

GEORGE SHULTZ:

What to do about it is to set your vision and your goal, and ask yourself, "What are the steps you need to take to get there?" You need to get control of fissile material. I was encouraged that President Obama, some months ago, convened some 47 heads of government, including all the major ones, to discuss the subject of how do we get control of our fissile material. There's a lot of it lying around. And you wanna get control of it so somebody can't get it. How do you get control of the nuclear fuel cycle?

Nuclear power plants use enriched uranium. If you can learn how to enrich uranium to that level, you can enrich it for a weapon. And when you get through, the spent fuel can eventually be processed into plutonium. It's a little harder to make a bomb out of plutonium than it is enriched uranium. But that could be done, after all. The Nagasaki bomb was a plutonium bomb. And that was a long time ago. So-- that's another step. And there are a whole series of things that are doable, concrete things that we should get going on. And each step basically makes the situation safer.

JIM GLASSMAN:

But-- if you were Secretary of State today, what would you do about Iran?

GEORGE SHULTZ:

Well, first of all, I would be trying to develop as many hard-hitting sanctions as possible. That's being done. It's hard to do, particularly because you need to get the cooperation of Russia and China. You're getting some, but not as full cooperation as I think is desirable. Second, I think that you use our information agencies to project into Iran information to the people of Iran about what's happening to them.

Their most talented scientists and engineers are being devoted to producing nuclear weapons. The meantime, they-- their refining capacity is very limited. And their refinery is not a particularly good one. They have to im-- they have lots of crude oil. They export it. But they can't produce their own product.

Because all their engineers and scientists are working on something else. So, they have riches in Iran. Their inflation rate is way up there, 40, 50 percent. Their unemployment is high. The protests that we've seen in Iran show that people understand this. They understand the regime is not working in-- in their interest. So, we need to fan that flame, and-- and let them know which side we're on.

JIM GLASSMAN:

How do-- how do you feel the Obama administration is doing at-- thwarting-- Iranian acquisition of a nuclear weapon?

GEORGE SHULTZ:

They're certainly very aware of the problem. Everybody is. I think they have been working the sanctions issue strongly. So, I'm in favor of that. I didn't think they came on anywhere near as strong in support of the dissident movement that we saw in Iran. And I would advocate, as I said earlier, doing much more with that.

JIM GLASSMAN:

Let's just switch to North Korea, 'cause I think-- that-- that certainly is the other urgent problem. And you say the North Koreans-- seem to have nuclear weapons.

GEORGE SHULTZ:

They do.

JIM GLASSMAN:

And-- but how much of--

GEORGE SHULTZ:

Not much. But they have some. And they've demonstrated the ability to produce one.

JIM GLASSMAN:

And how much of a threat are they at this point?

GEORGE SHULTZ:

They are getting away with murder all the time. For instance, they recently sank a South Korean warship. That's an act of war. Our U.N. Security Council didn't even name North Korea in its commentary on that event. So, one of the things we need is a stronger, more decisive security council with some teeth in it.

JIM GLASSMAN:

I mean, are-- are you worried that maybe one of the reasons that the security council didn't name North Korea is just fear that the North Koreans now have nuclear weapons and we shouldn't rile them up in any way?

GEORGE SHULTZ:

I think what the North Koreans have done is put a range of artillery, high-powered artillery, not too far from their border, all aimed at Seoul. And so, they say, "If you mess with us, we'll decimate Seoul."

JIM GLASSMAN:

Let me take you to another part of the world where nuclear weapons are important. And that is Pakistan. Pakistan and India have had tensions for many, many years. Is that another slash point? I mean, is-- is-- is that an area that-- concerns you? And what can we do about it?

GEORGE SHULTZ:

Of course, it's an area of concern. They both have nuclear weapons. But they have long-standing disputes. And there's lots of terrorist activity going on. Then you have the complication of Afghanistan, and the interests of both of them in Afghanistan, and the-- all of the ambiguities about Pakistan's attitude toward the Taliban. So, it's a very complex, related kind of situation to work with.

JIM GLASSMAN:

And is there a way that the Pakistanis-- could reduce-- Or is there a way we can persuade the Pakistanis to reduce-- their nuclear weapons? I mean, are they kind of on your agenda for making-- for-- for--

GEORGE SHULTZ:

Of course. Everybody's on the agenda.

JIM GLASSMAN:

But-- but especially-- but especially the Pakistanis. I mean, I mean, I-- I just think there are a lotta people who are concerned. You got a country where there's not much in the way of-- a central government. And obviously, they're havin' lots of problems with-- with-- terrorists on the border, as you say. And-- and they have a nuclear weapon. I mean-- as-- as you look across the entire world at-- I mean, North Korea has a problem, absolutely. But Pakistan has a pretty weak government.

GEORGE SHULTZ:

Well, but if you say to Pakistan, "Why don't you get rid of your nuclear weapons," and nobody else does, that's a non-starter. If I were Pakistan, I'd throw you out. That's why we're saying, "Let's have a worldwide effort to get rid of nuclear weapons, to reduce them and eventually get rid of them."

That was Ronald Reagan's view. That was John F. Kennedy's view. It was basically Eisenhower's view. So, when you get that overall purpose stated, and then if you see this becoming something on the global agenda, then you can fit reducing Pakistan's weapons into that, as well as India's and China's.

JIM GLASSMAN:

So, do you consider Russia a threat at all?

GEORGE SHULTZ:

Not a real threat to us. But Russia does have this gigantic number of nuclear weapons. And they're aimed at us. And we have it aimed at them. I think it's insane. Cold War is over. And we don't want the chance of an accident or anything. We should de-alert these weapons.

But Russia has huge problems itself. Russia has a stunning demography. Its birthrate is very low. The longevity of men is only 60. Women live 12 years longer than men in Russia. Its population is declining, not "will decline," is declining. Its labor force is shrinking in proportion to its total.

JIM GLASSMAN:

And-- and do the Russians still have a lot of loose nuclear material, fissile material, lying around? Or have we done a good job in-- in trying to get rid of that?

GEORGE SHULTZ:

I can't answer that definitively. But I think we've done a very good job. Senators Nunn and Lugar produced a program called the Nunn-Lugar program that has worked on that. And it's not only done substantive things. But it's had the advantage of putting good technically oriented people on both sides, in touch with each other. And that kind of relationship pays off in the long run.

JIM GLASSMAN:

Let's-- turn to the issue of terrorism. You-- you gave a speech in I think the early 1980s, about preemption of terrorism, which was somewhat controversial in its day, but very, obviously, quite prescient. Do you think we're doing enough to combat terrorism?

GEORGE SHULTZ:

You can never do enough. And at the same time, you don't want to do too much, in the sense of do things that compromise our own values. But I thought when I was in office, and the speech you referred to was in 1984, and I said, "This is a threat, and it can cause such damage that we ought to try to stop it before it takes place, rather than take a law enforcement mentality that says, 'Wait for something to happen and then try to find the people who did it.'" If you're going to have 1,000 people killed, that's not very intelligent. You wanna-- if you can find out about it and stop it from happening, that's much better. So, I think preemption makes sense. And that's what I said. And it was controversial. But I stick by my opinion.

JIM GLASSMAN:

And are we-- are we doing enough on the preemption front? I guess a lot of-- a lot of it, we're not gonna know about. But--

GEORGE SHULTZ:

I know when I was in office, that there were a lot of terrorist attacks that didn't take place because through our intelligence or through our collaborative relationships with the intelligence in other countries, we found out about them before they took place and managed to abort them. I assume that still is taking place, and that countries all over the world have taken steps in their own police work to-- try to abort these things. Occasionally, you hear about something of that kind that took place.

JIM GLASSMAN:

You-- you are-- so well known as-- a statesman and a diplomat, that-- many people don't even know that you spent much of your career in the area of economics, finance and business. And I wanna just turn to a few questions about-- about the economy. What-- what do you think is the biggest problem that faces the U.S. economy today?

GEORGE SHULTZ:

The lack of growth.

JIM GLASSMAN:

So, how do-- how do we get growth started again?

GEORGE SHULTZ:

Well, that's the key. Right now, we have in place what I would call an anti-growth policy. We have huge uncertainty about practically everything, including what's going to happen to tax rates. That tends to freeze everything up. So, we've got to remember that people respond to things that look like they're gonna stay there. Temporary things just create displacement of stuff from one time to another time. So, we need to have an economic policy in which we say, "This is a good policy. This will get us where we want to go. And here it is, and we're sticking to it."

Then, I think we need to recognize, incentives matter. People respond to incentives. You see that all over the place. And probably the biggest in center is tax rates. The idea that in this setting there should be some, even, uncertainty about whether we're gonna raise tax rates, is absurd. You don't wanna raise tax rates when you're trying to stimulate activity. Quite the other way around.

So, gets things on a permanent basis. Make it clear to people; I would say the tax regime now in place is going to stay in place. Don't say for two years. All you do is create another cliff. Say, "These are the-- this is the tax regime. And maybe it'll be changed some time, but that'll be by some Congressional action, not some automatic cliff that's out there." So, that's something you need to do.

I think we need to create a sense of a rule of law, that people are going to be allowed to fail if they blow it, and bankruptcies are gonna take place along a clear rule-based system, not ad hoc interventions by people. When people say, "The government needs more power," I say, "Well, wait a minute. What we need is a clear statement of what's going to happen if somebody blows it in their company."

How's it going to work? And not have a lot of discretion in a governmental people. I'd like to see our federal reserve also be a little bit more rules-based. I think one of the reasons we got into all this trouble was too loose a monetary policy for too long. So, there's some basic principles out there that have worked in the past.

JIM GLASSMAN:

On the issue of taxes, do you think, for example, if President Obama and Congress said, just-- indicated immediately, that their intention is to extend the tax rate reductions that have been in place since 2001, that it would have an immediate effect in the economy as these incentives change, as you said?

GEORGE SHULTZ:

I wouldn't say extend. I would say regard them as permanent. They're never gonna be changed. They're like any other part of the tax system.

JIM GLASSMAN:

And the reason to regard them as is permanent-- as permanent--

GEORGE SHULTZ:

So that people can plan. So, you can think ahead. I'm a businessman, or I'm an individual entrepreneur. I'm trying to start a business. What's the tax environment that I'm gonna operate in? Makes a difference. Most of these small businesses are what are called S-corporations. So, they're taxed by the individual income tax rates. That's why messing around with those rates makes such-- a dent on entrepreneurs trying to start up new businesses or small businesses.

JIM GLASSMAN:

You know, with the-- with the anomalies of this recession and the sluggish period that's-- that's followed is that-- countries in the so-called developing world have-- many of them have actually done very well. India recently said it-- it's growing at nine percent. China's growing at, I think, about the same rate. Indonesia, Brazil, countries like that, are doing much better than developed countries. What-- what's the reason for that?

GEORGE SHULTZ:

The re-- basic reason is that they've adopted the principles that we've espoused and sold to them, and they're working. While we're abandoning those principles. So, we just go back to first principles, we'll do great. We're a wonderful country. We have, as Ronald Reagan used to say, our best days are ahead. And we just have to get back to common sense.

JIM GLASSMAN:

You-- you've written about social security. There was an attempt in the second half of the Bush-- tenure to-- the second Bush tenure, to-- reform social security and bring more private choice into it. What do you think oughta be done about social security?

GEORGE SHULTZ:

Well, first of all, we have to recognize that the social security system is now in trouble. We are paying out more than we're taking in. And that will grow. There is something called a trust fund. It basically exists only on paper. It's as though you decided to put money aside for your child's college education and you put money into it.

And every once in a while, you needed some money. So, you took it out and put in an IOU. Now, it comes time for college, and you've got a hat full of IOUs. In other words, useless. So, we've got to-- to take this on. I think we should start with a fundamental rule, namely that nobody over, say, the age of 55 is affected at all.

In other words, this reform is not about old people. It's about young people. And seeing that the system remains solid and intact for them, that's what reform is about. Right now, the system is arranged in such a way that a person, say, 30 years old today, would have a real income from social security about 50 percent greater than a current retiree.

That-- I don't think we can afford that. So, we should change. And it's fairly easy to see conceptually how you do it. You change the method of indexing. That is, you change it in such a way that you are guaranteed the real value of the benefit that you become entitled to. And also, the calculation of that real benefit is done in such a way that the real value of your contributions is maintained by indexing for any change in prices. So, I think it's a reasonably equitable way of doing it. And it can be done in such a manner that some people on the lower end of the income scale are treated a little more generally-- generously than those toward the top. And I think that's okay.

JIM GLASSMAN:

So, you-- you-- you fought with the Marines in World War II. And you started your government career beyond the Marines in-- in the Eisenhower administration.

GEORGE SHULTZ:

Right.

JIM GLASSMAN:

And you're talking about a change in social security that requires a certain amount of political courage or statesmanship or collaboration. Do you see those kinds of qualities today among members of Congress and people in government?

GEORGE SHULTZ:

I know quite a few members of Congress and members of the House and the Senate. And a lot of them that I know are terrific people. So people are there, somehow the atmosphere isn't good. But in 1983 when President Reagan was president, Tip O'Neill was Speaker of the House.

Somehow, those two Irishmen figured out how to make a major reform in social security. That's the last time the problem then, was acute, was faced up to. It was dealt with. And what they did has lasted all the way till now. So, if these two Irishmen can do it, why not us today? It's possible.

JIM GLASSMAN:

And I think that's a good point to end. Thank you, George Shultz. Thanks for coming.

GEORGE SHULTZ:

Thank you.

JIM GLASSMAN:

And before we go, I want to remind viewers that you can watch Ideas in Action whenever and wherever you want. Just go to our website to watch complete episodes or download podcasts to your MP3 player through the iTunes store. Wherever you watch, be sure to join us next time. That's it for this episode. For Ideas in Action, I'm Jim Glassman.

(MUSICAL INTERLUDE)

ANNOUNCER:

For more information, visit us at IdeasinActionTV.com. Funding for Ideas in Action is provided by Investor's Business Daily. Every stock market cycle is led by America's never-ending stream of innovative new companies and inventions. Investor's Business Daily helps investors find these new leaders as they emerge. More information is available at Investors.com.

This program is a production of Grace Creek Media and the George W. Bush Institute, which are solely responsible for its content.

1 Comment

This man has served as long as I can remember, he is an intelligent politician, he is soft spoken and also incredibly calculating, and most diplomats who have interacted with him have praised his negotiating skills, his sharp argumentation and uncompromising attitude. The Dems could take some lessons; his argumentation for a zero nuclear policy has been visionary but unfortunately not listened to. Now deal with Iran and North Korea, Pakistan and India, more soon to come.

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Featured Guests

George Shultz

Former Secretary of State

George Pratt Shultz is a government servant of the old school. He is a proud graduate of Princeton and MIT – served in the marines during World War II – and succeeded in the private sector as head of the Bechtel Corporation. Along the way he held four cabinet posts - including Secretary of the Treasury during the Nixon Administration and Secretary of State under President Ronald Reagan. Few can claim such wide-ranging experience and service to the country.
He now spends his time at Stanford University’s Hoover Institution. Increasingly, he advocates for what some would consider an impossible dream: a world without nuclear weapons. In 2007, he and three other prominent foreign policy experts – two Democrats, two Republicans - published an op-ed in the Wall Street Journal arguing for a worldwide moratorium on the spread of nuclear weapons. They were quickly dubbed “The Four Horsemen of the Anti-Apocalypse,” united in the belief that the acquisition of nuclear weapons by rogue actors such as North Korea and Iran, and the unrestrained trade and sale of nuclear material from such places as the former Soviet Union, is now our greatest threat. They are now working together on this goal at the Nuclear Security Project.